10 things to know when investing in stocks ? The Punch - Nigeria's ...

The stock market is still a major sector where shrewd investors plough in their investments, experts say. This is despite the global financial crash that impacted the sector negatively some years back. Okechukwu Nnodim, in this report, writes on basic things to know when investing in stocks

?Below are 10 key issues to consider when investing in the stock market, according to analysts:

?1. Buy different shares

Stockbrokers and veteran shareholders say experience from the 2008/2009 global financial crash, as well as fluctuations in stock prices have shown that it is important to buy shares of different firms when investing in the stock market. They say, for instance, buying just a few shares of four stocks cost more in commissions than putting all your money in one stock.

According to them, investing in just one stock might turn out to be counter-productive, as any crash in price in that stock may lead to a huge loss to the investor.

2. Be courageous

Analysts say courage is vital for any individual who has interest in investing in stock. According to them, the fluctuations in stock prices and occasional crunch due to human errors in financial management may frighten prospective investors. An Assistant Director with the Chartered Institute of Stockbrokers, Mr. Vincent Adubor, in an interview with our correspondent in Lagos, says stock market fluctuations should not be a major factor that will discourage investors.

He says stocks often bounce back and when they do, investors earn considerable dividends.

According to experts, some stocks viewed as dead, may suddenly gain attention depending on prevalent economic happenings. They advise investors not to sell their shares out of panic, as this may lead to regrettable loss. Rather, it is wise to consult a broker before selling off your shares as a result of panic. They advise investors not to allow a market slump change their long-term investment plans.

?3. Monitor your investments

Experts say a good investor must closely pay attention to happenings around his investments. They explain that no stock is guaranteed as safe at all times, stressing that even active stock of major companies could turn out to be cow chips. The President, Renaissance Shareholders Association, Mr. Olufemi Timothy, notes that the saying ?buy and hold as long as possible? does not work all the time in this present dynamic global economic environment.

?4. Invest early

The earlier one invests in stocks, the better his chances of earning more dividends, experts say. They advise that it is beneficial to start investing early, as the longer you have your money working for you, the more you will gain in stocks. They encourage investors in stock to always increase their investments either annually, biennially, quarterly or monthly.

?When you compound the returns from your investments in stocks over time, you realise that you have made considerable amount of money and this will really make your money grow and keep you well ahead of inflation,? says Timothy.

?5. Be selective while investing

It is better to invest in stocks that you know their market performances than in stocks which you know nothing about. Just as it is wise to diversify, experts say before investing in a particular stock which you have little or no idea about, consult a broker. They explain that chances are for you to lose your investments if you venture into the stock market without proper guidance. They say it is better to pay for the services of brokers and get good returns on your investment than losing your investment due to ignorance. Stockbrokers with long standing experience of the stock market, experts say, should be consulted.

?6. Avoid unnecessary predictions

Experts say predictions that a particular stock will always make good dividend should be avoided. They note that past performance of a stock is not always an indicator of future results. According to them, a cow chip stock may become a blue chip stock depending on the economic situation and at times, the company?s performance outside the stock market. They however, explained that series of factors contribute to the performance of a stock and warn that it is not advisable to predict all the time.

?7. Stick to certain decisions

Analysts say it is advisable for investors not to check the price of a stock or a stock market manual after selling the stock. The ability to stick to certain investment plans is also important when investing in stocks. According to them, the investor should think of the next line of action, rather than contemplating on his loss or studying stock market prices after selling a particular stock. Regretting the sale of a stock only leads to accusations and beating oneself up over something that can?t be changed. They say investors should learn to take their losses quickly and profits slowly. Adubor says every 80 per cent loss on a particular stock, often begins with an initial 10 per cent loss.

Experts say the market will always move up and down, but explain that even if it is going up, it is possible for an investor not to own the best performers. However, if the investor is diversified and sticks to his plan, this might pay off in the long run. They advise that your investment mix should include not just several stocks, but foreign stocks, large and small cap stocks and growth and value stocks. This, they advise, can go along with a mix of bonds, short-term investments and perhaps real estate and commodities.

?8. Be ready to take risks

Just as it is advisable to be courageous when investing in the stock market, the investor should also be prepared to take calculated risks. They say if a big crash in prices will get to you as an investor, then you better put a higher proportion of your investments in bonds, utilities or even in cash.

?9. Always consult experts when confused

You should get the best investment advice from experts in the business. Analysts say a lot of people invest in stocks because either a friend, brother, uncle or an acquaintance asked them to. Though this is not bad, they say it is better to invest wisely. Do some researches on your own by visiting websites, and also get expert advice.

?10. You cannot be right all the time

According to analysts, you will not always get cheap stocks that would be sold at high prices for better gains. ?This is an obvious truth, but that does not deter true investors at all,? Timothy says. They note that the subject of investing in stocks is not to make money all the time, but to make money when you take the right decisions.

More Stories in AM Business

Source: http://www.punchng.com/am-business/10-things-to-know-when-investing-in-stocks/

vaclav havel kim jong ii dead snapdragon snapdragon kim jong ill dead wedding crashers next iron chef